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Probably every one of you who has a business and a website have been approached through email or personal contact, and asked to spend money on Search Engine Marketing (SEM). This is NOT the same as Search Engine Optimization (SEO). SEM is sometimes called “buying your way into search results.” Cost per action (CPA).
Probably every one of you who has a business and a website have been approached through email or personal contact, and asked to spend money on paid search results (appear on the first page of search results, right hand column, despite low SEO rank). This is NOT the same as Search Engine Optimization (SEO). Cost per action (CPA).
Almost every online business I know (eCommerce, online software, mobile games) invests heavily in “customer acquisition” This includes investments often not properly measured (SEO, PR, Social) as well as costs that people measure more precisely (advertising, SEM, FB CPA/CPI ads).
In this model, you take some fraction of the lifetime value of each customer and plow that back into paid acquisition through SEM, banner ads, PR, affiliates, etc. The spread between your LTV and blended CPA determines either your profitability or your rate of growth, and a high valuation depends on balancing these two factors.
Use your customers and competitors to help you move the ball forward (buy a new tool, hire another analyst, kill hideous home pages, spend right amounts on SEM and SEO, publish rich media on your site, implement feedburner , or whatever else you want). When I say embarrass your senior management that's what I mean.
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